Reserve Bank boss lashed over ‘out of touch’ comments
A day after interest rates were increased for the 12th time, the Reserve Bank boss has said Aussies should work more and spend less.
Reserve Bank Governor Philip Lowe is getting roasted for another big idea on how to handle rising interest rates – work more and spend less.
The mortgage-free economist, who is 61 years old and obtained a cut-price mortgage subsidised by taxpayers, is sparking outrage again with his homespun wisdom.
“If people can cut back spending, or in some cases find additional hours of work, that would put them back into a positive cash flow position,’’ Dr Lowe said at the Morgan Stanley summit on Wednesday.
And he said plenty of homeowners are doing fine.
“People are affording to pay their mortgages even as they roll off from the fixed-rate loans to variable-rate loans,’’ he said.
“People are having to cut back with spending, and I think that’s going to be the environment we’re operating in for a while.”
In other words, just get a second job or cut back on spending.
It’s a suggestion that might work for some but it’s prompting a furious backlash on social media where some homeowners say they are being pushed to the brink.
It was enough to prompt a largely unprintable response from one Reddit user.
“Already work a 40hr day job and a 10ish hr night job mate. F**k these c***s,’’ one man said.
Another user said he did not understand the apologists for Dr Lowe.
“He’s paid a million bucks a year to control one lever. And he keeps getting it wrong,’’ he said.
“Badly. He stuffed up by keeping rates low for too long and then promising to keep them low “until at least 2024”. And now he’s stuffing up again by hiking rates beyond what people can sustain, probably forcing us into recession.
“And then he makes these ridiculous out-of-touch comments, showing he is completely detached from the consequences of his decisions.”
In March, the Reserve Bank governor was branded “out of touch” after it was revealed he purchased his Sydney home with the aid of a heavily discounted, taxpayer-subsidised mortgage.
Dr Lowe’s five-bedroom home in Randwick, purchased in 1997 for $1.075m – the same year he was appointed head of the RBA’s economic research department – was aided by a half-price loan from the RBA.
Dr Lowe took out two loans to purchase his Randwick property, including $241,000 loaned by the Reserve Bank.
His interest rate was locked at half the standard variable rate being paid by Commonwealth Bank customers under the scheme.
An RBA spokesperson confirmed that Dr Lowe had repaid his loans, did not have a borrowing facility with the RBA and all financial disclosures were correct.
“So let’s get this straight, the RBA helps set the home loan rates for the rest of us, but RBA members have access to a special set of rules,” radio host Ben Fordham said.
“It highlights how Philip Lowe is out of touch with the average Australian … He doesn’t share our pain, he’s living on another planet!”
Recently, Dr Lowe sparked debate with some more big ideas for the rising cost of rent and housing.
He suggested younger Australians move home or rent out spare rooms to lodgers.
“Because as rents go up people decide not to move out of home, or you don’t have that home office, you get a flatmate,’’ he said.
“The increase in supply can’t happen immediately, but higher prices do lead people to economise on housing.”
Fresh blow for would-be homeowners
The International Monetary Fund has poured cold water on a key housing policy which would make it easier for first-home buyers to get a loan.
RBA’s major clue on next rates decision
Struggling Aussie homeowners could get a rate cut sooner rather than later as the Reserve Bank says it is “increasingly confident” about a reduction.
Ray of hope emerges for Aussie economy
A new outlook has forecast the Australian economy is on a “narrow path to a soft landing” and is tipped to improve next year – but there’s a major catch.